February 12, 2008
Changing Law Firm Leverage
Much is said regarding the importance of leverage for increasing per partner income. However, changing headcount leverage is not an easy task. There are HR considerations (do new attorneys fit in, do they have the right attitude, will they stay for the long term, etc) as well as existing habits (partners not sharing work). However, based on the 2007 Law Firm Economic Survey from LexisNexis, if your partners can learn to share work, more immediate benefits are possible through billable hour leverage.
The way you get there is through increasing billable hour requirements. Does this mean more work? Hardly. How about just providing blackberries for your fee earners and utilize tools like Juris' Mobility Connector? According to a study from Ipsos Reed, blackberry users recover 54 minutes a day in productivity. That improves productivity by roughly 196 hours per year per fee earner.
Next is to put your partners to work - non-billable work. This year is a critical year for law firms. If in fact we are headed towards an economic down cycle, there will be tighter budgets for clients and that means price pressure on law firms. Relationships are key. Lawyers need to market themselves as not only experts, but trusted counselors. It can't be said enough that if your equity partners are not willing to get out of the office and maintain as well as create new relationships, non-equity partnership may be a better fit.
What to do with the work that is being left on the equity partner's desk? Give it to associates (or non-equity partners). Don't let them become idle! The 2007 survey shows that there is a strong correlation between associate productivity and per partner income. If you have associates already billing at or near 1,800 hours, then it is time to hire new associates. If you want to push that number to 2,000 that is fine, but you don't need to work that hard to make your target profit.
Assuming you have the workload to justify new hires (including taking the extra work from partners who are out building and maintaining relationships), increasing head count leverage is your best bet for increasing per-partner income.
In the above scenario, based on 29 fee earners working 1,610 hours a year, profit per equity partner totals $284,398. Below, just by adding two associates and increasing hours a mere 12 minutes a day (50 hours per year per fee earner), per equity partner profit increases nearly 20% to $340,418.
Just think what the above would be if you gave fee earners blackberries and you recovered an hour per day from each of them utilizing tools like MyJuris Mobility.
Head count leverage is a valuable tool for increasing income but is dependent on workload. If equity partners are not willing to pass work to associates and get out of the office to build and maintain relationships, your firm is leaving both scalability, money and eventually your own talent for other firms to take.
Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:
877/377-3740, e-mail info@juris.com or go to www.Juris.com.
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Filed under Blog, Leverage, productivity by Brian J. Ritchey
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